Aug 1 (Reuters) - Real estate investment trust Kimco

Realty ( KIM ) topped market expectations for second-quarter

revenue and lifted forecast for annual funds from operations on

Thursday, helped by steady leasing demand at its

grocery-anchored shopping centers.

A shrink in supply of rental spaces has allowed commercial

real estate firms such as Kimco ( KIM ) to raise rental rates despite

some weakness in consumer spending affecting retailers.

"We see these positive trends continuing, and with $63

million of future cash flow from signed leases that have yet to

commence paying rent, we are comfortable raising our full-year

outlook," Chief Operating Officer Conor Flynn said in a

statement.

Kimco ( KIM ) completed its all-stock acquisition of RPT Realty as

the company looked to consolidate its presence in the Sun Belt

region in the United States that extends through states such as

Virginia, Texas, Florida and Nevada.

Kimco's ( KIM ) portfolio occupancy rate rose by 40 basis points

year-over-year to 96.2% in the quarter ended June 30.

Kimco ( KIM ) added that its small shop occupancy was at 91.7% in

the second quarter, matching an all-time high for the company.

The Jericho, New York-headquartered firm now expects

full-year funds from operations between $1.60 and $1.62 per

share, compared with its earlier target of FFO per share of

$1.56 to $1.60.

Kimco's ( KIM ) total revenue of $500.2 million for the second

quarter beat analysts' average estimates of $497.8 million, as

per LSEG data. Net revenue from rental properties was $496.2

million.

The company's funds from operations, a key REIT metric that

defines cash flow from core operations, rose to 41 cents per

share in the quarter from 39 cents a year ago. Analysts had

expected an FFO of 40 cents.